05. Portfolio Optimization with 2 Stocks

Let’s say we want to construct a portfolio containing 2 stocks, Stock 1 and Stock 2.

Stock 1:
Expected return=15%,
Volatility=10%

Stock 2:
Expected return=10%,
Volatility=5%

Correlation between Stock A and B = 0.25

What weights on Stocks 1 and 2, x_1 and x_2 , will give the minimum variance portfolio?